Economy 2013

[takao]

the local newspaper had a report on how the different euro countries debt percentages changes from 2011 to 2012 but it's to late today to type it in , but i'll update tomorrow

some countries actually managed to lower their debt while some others increased theirs still, so i wouldn't be surprised to see non austerity measurements from those countries this year to improve the euro economy situation while keeping their debt at the 2012 level

[miloblithe]

Originally Posted by jnpy!$4g3cwk

It has been found, historically, statistically, that if the government public Debt-to-GDP ratio is greater than 90%, it starts to hurt economic growth, so, that is something to be avoided. Given how this ratio can easily jump 10% in a crisis or downturn, and, it is better that it stay under 80% in normal times. There is an argument that says that the debt shouldn't be zero, though -- it is good to have an established government bond market with the machinery already in place.

The "90%" figure comes from Reinhart and Rogoff. For developing countries, the number is more like 60%.

Here is an online reference of the analysis:

http://www.economics.harvard.edu/fil..._Time_Debt.pdf

http://en.wikipedia.org/wiki/Carmen_Reinhart

http://en.wikipedia.org/wiki/Kenneth_Rogoff

I disagree with some of their other policy recommendations in other publications, but, I think their analysis is generally very good.

Oh, and the way the Debt was paid down from Truman to Carter? People (generally) paid their taxes. It works.

Wait a minute. You're going to back up your arguments with references to papers published in peer-reviewed journals? That's going to cause an awful lot of confusion around here.

[dime21]

http://www.washingtonpost.com/blogs/...time-since-09/

Economy shrank for the first time in three years. Obamanomics: Where "moving forward" means falling further and further behind.

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Originally Posted by jnpy!$4g3cwk

A Debt-to-GDP ratio greater than 100% doesn't mean you are broke. When a family buys a house that costs 3X their income, they aren't 3X broke.

Wrong, your analogy and your logic are flawed.

You forgot to add the value of the house to the family asset list. A family buys a house costing $300k. Yes, they are $300k in debt, but they also now own an asset worth $300k, so it's a wash. From the time they make their first payment, they are in the green, since the asset is worth more than the liability.

Not so with our government debt. The $13 Trillion in debt is unsecured; it's not backed by an asset. It's more like credit card debt. It's as if your hypothetical family has credit card debt that has exceeded their income, and that credit card debt is all from buying gas and groceries - things that no longer have value because they've already been consumed. It's pure debt, with no assets behind it.

[rdowns]

Originally Posted by dime21

http://www.washingtonpost.com/blogs/...time-since-09/

Economy shrank for the first time in three years. Obamanomics: Where "moving forward" means falling further and further behind.

Your link claims it was due to reduced government spending. I thought that would give you a woodie.

[dime21]

Originally Posted by rdowns

Your link claims it was due to reduced government spending. I thought that would give you a woodie.

Some mild morning wood in the mid-afternoon, yes. But it didn't last, after I saw that it was defense cuts.

[bradl]

Originally Posted by rdowns

Your link claims it was due to reduced government spending. I thought that would give you a woodie.

I would think the opposite. This should prove that cutting spending DOES NOT WORK by itself, and needs increased revenue (possibly including tax hikes for those over $250K). In short, this just proved the biggest talking point from all the Reds completely wrong.

BL.

[rdowns]

Originally Posted by bradl

I would think the opposite. This should prove that cutting spending DOES NOT WORK by itself, and needs increased revenue (possibly including tax hikes for those over $250K). In short, this just proved the biggest talking point from all the Reds completely wrong.

BL.

I only said reduced govt. spending was something he should like.

[bradl]

Originally Posted by rdowns

I only said reduced govt. spending was something he should like.

True, and no argument there. I was just getting to the fact that he got what he wanted (reduced spending), which would have given him that woodie, and then the FAIL because it didn't work/had the opposite effect than what he was looking for.

BL.

[RSL]

Originally Posted by dime21

Not so with our government debt. The $13 Trillion in debt is unsecured; it's not backed by an asset.

So you're saying the entire USA is worth less than 13 trillion?

The debt is backed by the Governement of the United States. For even the most skeptical investors, that's more than enough. Just look at the historically low interest rates on new debt: http://finance.yahoo.com/echarts?s=%...rce=undefined;

[ericrwalker]

So, if we can't pay our debts, you're saying they can repo our country, or maybe just a few citizens?

Originally Posted by RSL

So you're saying the entire USA is worth less than 13 trillion?

The debt is backed by the Governement of the United States. For even the most skeptical investors, that's more than enough. Just look at the historically low interest rates on new debt: http://finance.yahoo.com/echarts?s=%...rce=undefined;

[jnpy!$4g3cwk]

The U.S. debt is backed by the governments ability to tax the largest economy in the world, and the willingness of its citizens to pay taxes. That is a much, much more effective mechanism than a small horde of gold somewhere.

[miloblithe]

Originally Posted by dime21

Not so with our government debt. The $13 Trillion in debt is unsecured; it's not backed by an asset.

Additional to its ability to tax, the U.S. Government has tons of assets. Here the left-wing Heritage Foundation mentions a few:

http://blog.heritage.org/2011/02/17/...needed-assets/

Gold, land, mineral rights, buildings, loans, foreign currency, etc.

[jnpy!$4g3cwk]

Getting back to this one:

http://www.washingtonpost.com/blogs/...time-since-09/

Of course the cuts in defense spending reduced the GDP. Any right-wing commentator who is surprised by this is a certifiable (insert politically correct term for someone who knows very little about anything).

Add to that the constant struggle in Europe over the PIGS budget issues and the effect on the Euro, and, I'm surprised the drop in GDP wasn't larger
(for example, I don't suppose Apple and Cisco showed big sales increases in the Mediterranean region in 2012). And, we are not done with the budget/sequester issue here, either.

The bright spot is that despite all the unnecessary uncertainty constantly being drummed up by Right Wing Republicans (sadly, a redundant phrase these days) in the run-up to the election, the U.S. economy actually is getting stronger.

[hulugu]

Originally Posted by jnpy!$4g3cwk

Getting back to this one:

http://www.washingtonpost.com/blogs/...time-since-09/

Of course the cuts in defense spending reduced the GDP. Any right-wing commentator who is surprised by this is a certifiable (insert politically correct term for someone who knows very little about anything).

Add to that the constant struggle in Europe over the PIGS budget issues and the effect on the Euro, and, I'm surprised the drop in GDP wasn't larger
(for example, I don't suppose Apple and Cisco showed big sales increases in the Mediterranean region in 2012). And, we are not done with the budget/sequester issue here, either.

The bright spot is that despite all the unnecessary uncertainty constantly being drummed up by Right Wing Republicans (sadly, a redundant phrase these days) in the run-up to the election, the U.S. economy actually is getting stronger.

Right, the economy faced two "headwinds" coming out of the election, both caused by Congress: the uncertainly because of the budget negotiations and the debt ceiling debate.

Meanwhile, state and local agencies have run out of federal money and are cutting jobs again and the defense cuts will also force companies to cut the workforce or spend less on equipment or supplies. This creates more drag on the economy.

[thekev]

Originally Posted by dime21

Some mild morning wood in the mid-afternoon, yes. But it didn't last, after I saw that it was defense cuts.

You're saddened because it was defense? Obviously they do have an impact on the economy. Early 90s defense cuts after the breakup of the Soviet Union also slowed the economy. Would you have been against that as well? The main areas where I see defense cuts as a problem are things like veterans benefits, which amount to reneged agreements. What do you think we really get out of the continued military spending? The use of military R&D in private infrastructure does come up, but it's terribly inefficient in terms of cost. Are you concerned about the employees of government contractors?

[RSL]

Originally Posted by ericrwalker

So, if we can't pay our debts, you're saying they can repo our country, or maybe just a few citizens?

Who's they? The Govt = We the People. It's called representative democracy.

[samiwas]

Originally Posted by dime21

http://www.washingtonpost.com/blogs/...time-since-09/

Economy shrank for the first time in three years. Obamanomics: Where "moving forward" means falling further and further behind.[COLOR="#808080"]

Hmmm...interesting. I just did my monthly entry of all my investment numbers into my spreadsheet. I started the spreadsheet in January of 2008. I have seven investments. Three stocks (none of which are Apple), two mutual funds, one retirement account, and one annuity.

On January 31, 2013, six of the seven investments were at their highest level since I started keeping track. The last one has never recovered since the low level of February, 2009, but is still worth more than three times its value since then. Except for my retirement account, which I regularly deposit into, I do not buy, sell, or trade or do anything with these investments. I just let them sit and so what they do.

So, if everything is falling further and further behind due to Obama, why are six of my seven investments at their highest levels in five years?

Also, why is the DJI just about 100 points from its all-time high?

These do not seem to be signs of a crashing economy. Or maybe I'm just seeing things wrong.

[hulugu]

Originally Posted by samiwas

Hmmm...interesting. I just did my monthly entry of all my investment numbers into my spreadsheet. I started the spreadsheet in January of 2008. I have seven investments. Three stocks (none of which are Apple), two mutual funds, one retirement account, and one annuity.

On January 31, 2013, six of the seven investments were at their highest level since I started keeping track. The last one has never recovered since the low level of February, 2009, but is still worth more than three times its value since then. Except for my retirement account, which I regularly deposit into, I do not buy, sell, or trade or do anything with these investments. I just let them sit and so what they do.

So, if everything is falling further and further behind due to Obama, why are six of my seven investments at their highest levels in five years?

Also, why is the DJI just about 100 points from its all-time high?

These do not seem to be signs of a crashing economy. Or maybe I'm just seeing things wrong.

The reality of Wall Street is increasingly divorced from the reality of Main Street. Companies are doing well by cutting costs and increasing productivity, but those metrics don't create middle-class jobs.

The right doesn't care about this, nor do they care about income inequality, but these are but two of the things that keep this economy from growing out of recession.

That said, the economy has been slowly growing out of recession for years, but Republicans don't want to acknowledge this because they don't want any credit to go to the stimulus (either TARP or the Obama-era programs) because it harms their economic ideology.

[Eraserhead]

Originally Posted by hulugu

The reality of Wall Street is increasingly divorced from the reality of Main Street.

True, but on main street I think you'd be hard pressed to say the US is worse off than the were in January 2009 when Obama took over.

[Dmunjal]

Originally Posted by samiwas

Hmmm...interesting. I just did my monthly entry of all my investment numbers into my spreadsheet. I started the spreadsheet in January of 2008. I have seven investments. Three stocks (none of which are Apple), two mutual funds, one retirement account, and one annuity.

On January 31, 2013, six of the seven investments were at their highest level since I started keeping track. The last one has never recovered since the low level of February, 2009, but is still worth more than three times its value since then. Except for my retirement account, which I regularly deposit into, I do not buy, sell, or trade or do anything with these investments. I just let them sit and so what they do.

So, if everything is falling further and further behind due to Obama, why are six of my seven investments at their highest levels in five years?

Also, why is the DJI just about 100 points from its all-time high?

These do not seem to be signs of a crashing economy. Or maybe I'm just seeing things wrong.

You are seeing things wrong. The markets are running on a sugar high courtesy of the the Federal Reserve and $85B a month in QE. Much of that finds itself in the markets and even housing.

But like the housing bubble in 2007, it is not built on fundamentals from the bottom up and is unsustainable. At some point, like in 2000 (dotcom) and 2008 (housing), this will also end badly. This time it will be worse because it is bigger than the last two and will affect the bond market and the value of the dollar.

I remember the same comments like yours in 2007 when the Dow hit 14000. It has taken 6 years to recover that high but we are poorer now because the cost of living has gone up even more.

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Originally Posted by Eraserhead

True, but on main street I think you'd be hard pressed to say the US is worse off than the were in January 2009 when Obama took over.

I would disagree. With almost every measure, we are worse than in 2009. Fewer people working overall, more people on disability, more people on food stamps, etc.

Some areas are recovering on main street but it is mostly on the coasts and among the affluent.

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Originally Posted by hulugu

The reality of Wall Street is increasingly divorced from the reality of Main Street. Companies are doing well by cutting costs and increasing productivity, but those metrics don't create middle-class jobs.

The right doesn't care about this, nor do they care about income inequality, but these are but two of the things that keep this economy from growing out of recession.

That said, the economy has been slowly growing out of recession for years, but Republicans don't want to acknowledge this because they don't want any credit to go to the stimulus (either TARP or the Obama-era programs) because it harms their economic ideology.

The Republicans are clueless about the economy and are just trying to score points.

But the Democrats have no idea what this level of deficit spending, borrowing, and QE will cause. All we're doing is borrowing from the future and sending the bill to our children and grandchildren.

That debt burden will ensure that the next generation will have a lower standard of living than ours.

[mcrain]

Originally Posted by Eraserhead

True, but on main street I think you'd be hard pressed to say the US is worse off than the were in January 2009 when Obama took over.

Originally Posted by Dmunjal

You are seeing things wrong. The markets are running on a sugar high courtesy of the the Federal Reserve and $85B a month in QE. Much of that finds itself in the markets and even housing.

I would disagree. With almost every measure, we are worse than in 2009. Fewer people working overall, more people on disability, more people on food stamps, etc.

Hmmm. So it sounds like the more government tries to help big business with the concept that the better the "makers" do, the better the "takers" will do is being proven to be nothing more than a total and complete fallacy.

[hulugu]

Originally Posted by Eraserhead

True, but on main street I think you'd be hard pressed to say the US is worse off than the were in January 2009 when Obama took over.

We are, but that's in opposition to these other forces. We have a massive wage stagnation, a screwed-up tax system, rising health care costs, huge defense spending, and yet, we're unwilling to prosecute Wall Street, reorient the tax system to the benefit of the middle class, nor deal with our spending on health care and defense.

Until we do, the economy is like a ship dragging an anchor along the bottom. She's got a powerful engine, but we're burning fuel and time because we're unwilling to reconfigure the ship.

[Dmunjal]

Originally Posted by hulugu

We are, but that's in opposition to these other forces. We have a massive wage stagnation, a screwed-up tax system, rising health care costs, huge defense spending, and yet, we're unwilling to prosecute Wall Street, reorient the tax system to the benefit of the middle class, nor deal with our spending on health care and defense.

Until we do, the economy is like a ship dragging an anchor along the bottom. She's got a powerful engine, but we're burning fuel and time because we're unwilling to reconfigure the ship.

If you want these things to happen politically, it won't happen with either party as they are beholden to their lobbies. Both parties will support the banks, the screwed-up tax system, frivolous defense spending, etc.

If you truly want to support the middle class and bring back a sustainable economy, we need to clear the current system. We need to stop the QE and deficit spending and force every lobby to find a new funding mechanism. This will get rid of the TBTF banks that no regulation can do. This will force the defense contractors to retool and downsize. This will force us to redo the tax code based on consumption and not income.

If you truly believe that the current administration wants the change you speak of, you're living in a pollyanna world.